A Muslim couple were assembling components of a home-made bomb to attack Jewish neighbourhoods after becoming radicalised by al-Qaida propaganda on the internet, a court heard on Wednesday.

Mohammed Sajid Khan, 33, and his wife, Shasta, 38, from Oldham, Greater Manchester, bought substances and equipment from supermarkets to assemble an improvised explosive device to launch a terrorist attack after carrying out visits to potential Jewish targets in Manchester, the city's crown court heard.

Bobbie Cheema, the prosecutor, at Manchester crown court, said: "Perhaps it can be summarised this way: it was jihad at home. Between them they acquired substances, common or garden, that can be purchased in supermarkets, equipment and information of use that would help them to make explosives, and began the process of assembling an improvised explosive device."

The couple also carried out "multiple reconnaissance" trips to Jewish areas of Salford or Manchester, it was alleged.

Behind their "apparent normality of daily life", Khan, an unemployed car valeter, and his wife, a hairdresser, planned to carry out "jihad at home", Cheema told the court.

The couple were only stopped by chance after a minor domestic row led to police being called to their home in Oldham.

Shasta decided to inform the police after her brother told officers went to the house: "I think he's a home-grown terrorist."

Her husband has already pleaded guilty at an earlier hearing to terrorism offences. She has denied any involvement and pleaded not guilty to engaging in conduct in preparation for acts of terrorism and three counts of possessing information useful for committing or preparing for an act of terrorism.

"Mercifully they were both stopped and arrested before they could go any further and finalise and carry out their plans," the prosecutor said.

Cheema said that behind the apparent normality of daily life, the couple believed in and supported an extreme ideology of jihad or holy war against the enemies of Islam, especially Jewish people.

The couple were both UK citizens, living in Britain and subject to our laws, Cheema said, but however strongly someone might object to British foreign policy it would amount to a criminal offence to act as they did.

"This couple were caught at the stage of preparation," she said. "They did not achieve the production of a functioning bomb, they scoped possible locations for an attack but did not yet have the final ability to carry it out."

She told the jury: "This is a terrorism trial."

The prosecution say the pair became radicalised in 2010 and 2011 by material they found on the internet, which had the aim of encouraging western Muslims to carry out jihad by mounting attacks in their own countries, independent of direction.

"In response, the two of them made preparations or assisted each other to make preparations, to carry out a terrorist attack on British soil, with the most likely target being an orthodox Jewish area in Prestwich, Greater Manchester," she said.

The prosecutor said that the couple were caught at the preparation stage: "They did not achieve the production of a functioning bomb. They scoped possible locations for an attack, but did not yet have the final ability to carry it out."

She said the path from radicalisation to the commission of a terrorist "atrocity" could be disrupted for many reasons. Some people might give up or change their minds, others might be exposed by the actions of the authorities.

In Shashta Khan's case, the "internal domestic crisis within their partnership" interrupted the progress towards committing a terrorist act.

Khan had been charged with offences that were not dependent on a completed terrorist attack; nor did it make any difference when she was arrested, she had still intended to carry out an attack.

"The offences she is charged with reflect what are, necessarily, preparatory stages, no more."

The court heard the pair met through an internet dating site for Muslims and quickly married, but were having disagreements by July last year. When an officer investigating a domestic incident spoke to Khan on her own, "she took it as an opportunity to spill the beans about the activities Sajid Khan had been undertaking".

But the prosecutor added: "As you might expect, she left out of her account entirely her own involvement."

It was her intention to cause serious trouble for her husband, but she had given no thought to the possible consequences for herself."

The jury heard that as soon as an allegation of terrorism was made, a substantial police operation began.

Cheema said: "Within a few days she was under suspicion as much as the man she had decided, in that late-night disclosure, to accuse.

"Furthermore, evidence came to light which incriminates her as much as her husband, and that is why they were both charged with those offences and why she is in the dock today."